Interim Report January - September 2001

Interim Report January - September 2001 ·New frame orders during the third quarter worth MSEK 210 ·3G TMA shipments to Western Europe begin ·Net sales declined with 3 percent to MSEK 884,8 (912,1) ·Operating profit declined to MSEK 0,5 (147,1) ·Net sales for third quarter MSEK 229,1 (314,0) ·Operating profit for third quarter MSEK -12,5 (53,4) SALES AND PROFIT First nine months 2001 The sharply weakening trend in the telecom sector had an effect on LGP's growth and profitability. Consolidated net sales amounted to MSEK 884.8 (912.1), which is a decline of MSEK 27.3, equivalent to 3 percent compared to the corresponding period last year. Telecom products account for 77.7 percent of total sales and compared to total sales last year, telecom sales increased by 2.2 percent. Growth for telecom products developed in-house was 24 percent compared to the similar year-ago period whereas sales of contractmanufactured mechanical products have fallen off sharply. Operating profit for the period amounted to MSEK 0.5 for the period (147.1) including amortization of goodwill. The operating margin was 0,1 percent (15,5). Operating profit was charged with costs for writing down inventory in an amount of MSEK 33.5. Amortization of goodwill was charged to earnings in an amount of MSEK 14.8 (15.0). Earnings per share amounted to SEK -0.41 (3.50). In order to adapt the cost level to lower market demand, 213 employees (37 salaried employees and 176 employees in production) were terminated during the year. In addition hereto, the Company has engaged in intense efforts to reduce its costs on a Group-wide basis. These cost savings has given effect during the third quarter, and is likely to have further effect during the fourth quarter. Another priority is to reduce the amount of capital tied up in the Group. A program has been initiated in all units to reduce the level of inventory of components as well as finished goods. All production of tower-mounted amplifiers and CDU units was moved to LGP's newly constructed production facility in Tullinge during the spring. On June 19 LGP decided to abandon its previous full-year forecast for 2001 with a sales of MSEK 1 850 due to the recession within the telecom industry, leading to that goals of growth and profitability will not be reached. A new forecast will not be given. Market Except for during the first quarter of the year, LGP's market was characterized by a significantly lower rate of growth than in prior years. As a result of weak sales during July and August, the Group's sales declined compared to the similar year-ago period. The primary reason for the decline is that several European operators are delaying their GSM expansion, awaiting availability of GPRS telephones, and also awaiting the beginning of 3G network investments. Another reason is sharply lower sales of contract-manufactured mechanical products during the past six months, as several major customers have focused on reducing their inventories of components and finished goods. An increased activity is noticed among the operators in Europe regarding 3G inquiries compared to previous quarters. In North America, the first nine months of the year were distinguished by relatively weak market demand. The reason for this is that several operators have delayed their investments. An increase in demand for GSM 1900 products was noted at the end of the third quarter, seen in the form of increased sales to OEM customers, as well as directly to American network operators. Growth in Asia Pacific continued to be good. At the end of September LGP concluded a 3G TMA contract in Asia Pacific with a leading OEM customer. Shipments are expected to begin during the fourth quarter of this year. This contract, and on-going 3G shipments in Europe, constitute proof of LGP's leading position in its market segments. During this quarter LGP received some important frame orders worth MSEK 210 whereof MSEK 55 refers to telecom products and MSEK 155 refers to products for mechanical processing. Third quarter 2001 Weak demand continued during the third quarter in Europe. At the end of the quarter demand increased slightly, however, and it is a positive sign that two European operators have begun to place continuous 3G TMA orders. Demand also increased in North America during the latter part of the quarter. Sales for the third quarter amounted to MSEK 229.1 (314.0), a decrease of 27 percent compared to the preceding year. The operating result was MSEK -12.5 (53.5). The operating result was affected by the write-off of an account receivable in the amount of MSEK 3.1, to customer which has filed for bankruptcy. Earnings per share were SEK -0.48 (1.28). CAPITAL EXPENDITURES The Group's net capital expenditures during the period January - September amounted to MSEK 144.9 (5.3) in buildings and land, and MSEK 55.2 (51.2) in machinery and equipment. Capital expenditures in buildings and land refers to investment in new head office in Sollentuna as well as production facilities in Tullinge. Depreciation amounted to MSEK 81.6 (59,9) and amortization of goodwill was MSEK 14.8 (15,0). PERSONNEL The number of employees as of September 30 was 792 (769). Decisions were made during the period to terminate 213 employees. Most of these employees had left the Group as of September 30. FINANCING The equity ratio as of September 30, 2001 was 57.7 percent. As of December 31, 2000 the ratio was 62.8 percent. The Group's liquid funds amounted to MSEK 30.3. Cash flow from current operations for the period amounted to MSEK 92.6 (195.6). Net after capital expenditures cash flow for the period amounted to MSEK -24.5 (0.1). As of December 31, 2000 the Group's liquid funds were MSEK 54.8. Shareholders' equity per share was SEK 32.0 (32.4). OTHER INFORMATION The regularly scheduled Annual General Meeting held April 24 resolved the issuance of a subordinated loan in a nominal amount of SEK 50,000 in the form of a debenture with detachable warrants. The warrants will be issued over a three-year period. All employees have then been offered to acquire warrants. The warrants have a tenor from June 5, 2001 to May 24, 2004. Under the warrant program, a total of up to 500,000 shares may be issued, resulting in dilution of about 1.8 percent of the number of capital and votes. The same accounting principles and calculation methods have been applied for the semi-annual report as for the most recent annual report. Stockholm, October 16, 2001 Board of Directors ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/16/20011016BIT00800/bit0002.doc Full Report http://www.waymaker.net/bitonline/2001/10/16/20011016BIT00800/bit0002.pdf Full Report